Editorial: Pritzker budget proposals a good start for debate

Friday

Feb 22, 2019 at 1:01 AM

It took years for Illinois' fiscal situation to get as terrible as it is. It will take time to dig out of it too.

That message clearly came through during Gov. J.B. Pritzker's first budget address Wednesday. Pritzker did not try to sugarcoat the state of Illinois' financial challenges during his address: $3.2 billion budget deficit, $15 billion debt in unpaid bills, $133.5 billion unfunded pension liability. We are cautious and concerned about some of the ideas he presented. Yet we found Pritzker's speech to be a realistic, but still optimistic, message from the person who starts off the annual state budget process.

The more than $38 billion spending plan, which covers the fiscal year that starts July 1, is done under the existing flat income tax structure, which Pritzker reiterated he wants to change to a progressive income tax structure where wealthy people would in theory pay more in taxes.

It takes a constitutional amendment to do that, and the earliest that can get before voters is November 2020. But Pritzker told the SJ-R editorial board in an interview after his speech that he wants lawmakers this year to approve putting it on the ballot. Much of his long-term budget plans hinge on that tax system being in place, he said, and he needs to know how likely it is to happen.

Debate on putting a graduated tax system before voters must include discussion on what the rates and brackets might be. Our concern with Pritzker's push for a graduated tax has always been that Illinoisans deserve to know what it would mean for their personal pocketbooks. While we wouldn't want those rates written into the constitution, lawmakers can't consider voting to put an amendment on the ballot without discussing rates.

The governor also addressed how he would generate other additional revenue to plug the $3.2 billion budget deficit. He would fill it, in part, by legalizing recreational marijuana and sports wagering; taxing e-cigarettes; restructuring how video gaming is taxed; and enacting a tax on plastic bags. Are all of those ideas popular or achievable? Probably not. But at least we know how he thinks it should be accomplished. Discussions can continue from there.

And no governor should give a budget address (although some have) without discussing the unfunded pension liability. There is no silver bullet that will solve the pension problem. Past efforts, no matter how good-intentioned, have often made the problem worse.

Pritzker is recommending tackling the problem from five angles: dedicate a portion of a progressive income tax to paying more than the minimum required pension payments; sell unneeded state assets and put the proceeds toward the liability; borrow $2 billion to infuse the pension funds with some cash; and make a temporary plan to allow employees to voluntarily take a lump sum pension payout permanent.

The fifth recommendation in particular makes us pause: He wants the state to have more time to pay its unfunded liabilities. The pension ramp, as it is called, dictates that the five statewide pension funds be 90 percent funded by 2045. Pritzker proposes to extend that to 2052. Doing so would reduce the amount of money owed into the system in the short term by an estimated $800 million annually.

The state's pension systems are such a mess in part because of previous governors taking pension "holidays," but Pritzker told our editorial board that isn't what he is doing. He argues the state can "smooth out" the steeply escalating pension costs with the extension — but unlike other administrations, he would continue to pump money into the funds. The plan deserves further discussion, and Pritzker seems to understand that any pension idea needs to be thoroughly scrutinized. Retired employees and taxpayers have seen promises broken when it comes to pensions and are right to be skeptical.

The budget now goes to the legislature, where lawmakers and special interest groups will bring their own concerns and priorities to the process. Pritzker said he welcomes everyone to that conversation, and that is something all Illinois residents should hold him to. Budgets should be a collaborative effort, ending with a balanced fiscal plan that Illinoisans can afford. That doesn't usually happen here. We would be thrilled if this is the year that starts to change.

The State Journal-Register

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